“Throw them out on the streets” cries the IMF. The Troika in its latest Memorandum of Understanding with Ireland is pushing for more house repossessions. The only reason it hasn’t happened so far is because the banks aren’t able to cover the losses and the State would have to go back to the taxpayer to further capitalize the banks. The fragile housing markets also would not be able to survive the shock of an avalanche of houses hitting the market coupled with the inevitable property tax.
Of course the politicians have framed it so far, that they are protecting the people’s interest. The country can ill afford this move currently, as the Troika well knows, but is pushing for this because of a repeal of the 1964 Act (used for repossessions) with a new Act in 2009 meant due to a drafting oversight, it applied only to loans taken out after December 1, 2009. The timing is lousy just as the Economic and Social Research Institute (ESRI) announces that Ireland has the highest proportion of households without a working adult out of 31 European countries and more than double that of the euro zone average.
The EU-IMF Troika wants the Government to remove a legal impediment constraining banks from repossessing properties tied to bad loans.
In the latest revision of Ireland’s bailout terms, published today, the Troika says the Irish authorities must introduce legislation remedying a flaw in legislation governing property repossessions.
Last year, Ms Justice Elizabeth Dunne found a failure to save aspects of old legislation when the Land and Conveyancing Law Reform Act 2009 was introduced meant the only registered properties that lenders could repossess for failure to pay mortgages were those for which they had demanded full repayment before December 1st, 2009.
According to the Central Bank’s latest figures, there were 167,000 mortgage accounts with €35 billion of debt in arrears at the end of June 2012.
At the same time, some 265 orders for possession were granted by the courts in the first six months of the year, down by almost 32 per cent on the same time last year, when 390 orders were granted.
The Central Bank’s head of banking supervision Fiona Muldoon recently criticised the banks for their slow progress in tackling mortgage arrears cases. saying the scale of the problem showed that “wait and see” had become the strategy of choice for lenders.
The latest update to the Troika’s memorandum of understanding with the Government states the authorities must move to remedy the flawed repossession legislation once adequate protections for debtors and their principal private residence were enacted via the proposed personal insolvency legislation.
The document also obliges the Irish authorities to publish banks’ reported data on loan modifications, including defaults of modified loans, “to permit analysis of the effectiveness of alternative resolution approaches”.
The bailout programme review also called on the authorities to halt overruns in health spending and to keep overall health expenditure below €13.6 billion next year.